On Thursday, Senator Jason Rapert spoke to the Rotary Club at the Red Apple Inn to address the severance tax issue, which has become a bitter battle between those who support the 7% severance tax on the natural gas industry in Arkansas and those who oppose it. Rapert is the first term Republican senator representing District 18. He is a vocal opponent of the measure being pushed by Sheffield Nelson that would place the initiative on the November ballot.

Rapert asserted that passage of a severance tax on the gas industry would severely impact the local economy in a negative way. He went on to say several groups are opposed to the idea of a severance tax, including the County Judge Association and the members of the Fayetteville Shale Caucus – a group of 16 state lawmakers that support an economically friendly environment for gas drilling in the Fayetteville Shale zone.

Rapert’s primary argument for opposing the passage of a severance tax on the gas industry was economic. He referred to the economic impact of the gas industry as a major part of the “lifeblood” of many local communities. He continued by saying, “this just isn’t the right time” for placing a higher, flat tax on the industry that doesn’t include categorical differentiation between the different production volumes and types of wells. He pointed out he has heard from many people who oppose the measure that have economically benefited from the presence of the gas industry, either through jobs or royalty checks. He argued that placing a higher tax burden on the industry would negatively affect the economic gains received by these persons and it would be a mistake to “shoot the golden goose.”

Rapert went on to counter Sheffield Nelson’s claims that passage of the severance tax would bring Arkansas in line with other states where active drilling is currently underway. He argued that having an across the board 7% tax would set us apart from taxes in other states as the current measure does not account for different categories of production and volume. He also pointed out that Arkansas is the only state in the nation that has a noise ordinance regulating active wells, introduced and passed by Rapert.

One Rotary member at the meeting was particularly concerned about the possibility of drilling under the lake. When asked about his position concerning lake drilling, Rapert claimed that the point was moot as the federal government owned the leases to Greers Ferry Lake and they had denied a request by private companies to drill. The member pressed Rapert further by asking what his position would be should the government’s position change concerning drilling leases and Rapert answered by saying as things stand now, “I do not support drilling under the lake.”